Petrovietnam Refining and Petrochemical Corp. (BSR) has entered its planned upgrading and expansion project at the 6.5-million tonne/year (tpy) refinery in the Dung Quat Economic Zone of Binh Tri Commune in Binh Son District, Quang Ngai Province, Vietnam, into the execution phase following a formal project-kickoff meeting held earlier in August and final selection of main contractors in July.

Official implementation of engineering, procurement, and construction (EPC) activities for the project follows BSR’s July 9 separate contract awards to a consortium of John Wood Group Ltd. (Wood) and Petrovietnam Engineering Consultancy JSC (PVE) for project management consultancy (PMC) and a consortium of China Chengda Engineering Co. Ltd. and Beijing Petrochemical Engineering Co. Ltd. (BPE) for EPC, BSR said in a release Aug. 26.

The $1.489-billion project aims to expand the refinery’s crude processing capacity to 171,000 b/d from 148,000 b/d, broaden the range of crude oils the site can process, and enable production of fuels meeting Euro 5-quality specifications.

In addition to increasing domestic refining capacity as well as improving feedstock flexibility and product quality, the upgrading and expansion work will enhance operating efficiency at Dung Quat, collectively contributing to the refinery’s ability to compete as fuel standards and market requirements become more demanding, according to BSR.

EPC implementation for project comes in the wake of kickoff meeting the BSR, the Wood-PVE PMC team, and the Chengda-BPE EPC consortium held on Aug. 21 after completing early mobilization work, including the appointment of key personnel, establishment of project-management structures, and alignment of coordination and reporting procedures, BSR said.

The parties also earlier agreed on a governance framework covering responsibilities, decision-making authority, risk management, change control, and technical assurances related to the project.

The early focus on governance reflects the scale and complexity of the work, with construction and equipment installation for the project planned for execution in a manner that enables continued operation of the refinery during the project timeframe, BSR said.

With a 37-month execution period beginning with the effective date of the EPC contract, the operator said it expects the Dung Quat upgrading and expansion work to be completed and ready for commercial operation sometime in 2028.

Financing targets

On Aug. 10, BSR also began arranging external financing for the expansion with issuance of a request for proposals to banks and international financial institutions for about $600 million of debt financing, which would cover about 40% of total investment required for the project.

BSR said it intends to have debt funding available for disbursement beginning in the third quarter of 2027. Until then, the company plans to use existing equity to support project spending.

The operator said it has aligned the financing schedule with EPC requirements in a phased approach that allows BSR to limit interest costs before major drawdowns while maintaining liquidity for construction payments and equipment procurement.